What a burst pipe really costs a shop

A pipe bursts overnight in a cold snap, and by morning there is water in the stockroom, the ceiling and the floor. For a small business, that is no longer a rare story. The Hartford analyzed more than 1 million small-business property and liability policies and found that water and freezing damage represented an estimated 22 percent of claims over the past five years.

Those claims also carry a real price tag. The Hartford put the average water and freezing claim at $34,600, the fourth most costly claim type. The company's 2015 report listed the average at $17,000.

The pipe is the small part

The repair itself is rarely the biggest cost. Water spreads to inventory, drywall, flooring and equipment, and a shop may have to close while crews dry it out. Triple-I explains that business income coverage can help with operating expenses during the period of restoration, including items such as rent, loan payments, taxes and payroll.

That coverage may still require a direct physical loss before it pays, Triple-I notes. A burst pipe in your own space is that kind of loss. Water that damages a neighbor's unit and closes the whole building may be handled differently, so ask.

A trend, not a fluke

The Hartford's comparison shows water and freezing damage claims rising from 15 percent of claims in 2015 to 20 percent in 2025. That ties it with burglary and theft as the most frequent reason small businesses file. The company points to tools such as water sensors that detect leaks as ways to limit the damage.

What to do before the next cold snap

• Find the shutoff. Make sure at least two people know where the main water shutoff is and how to close it.
• Keep the heat on. Ask your broker whether your policy sets any conditions for freezing losses, such as keeping the building heated, and follow them.
• Check your coverage. Ask how water damage is covered, what the deductible is, and whether inventory and equipment are included.
• Ask about income. Confirm whether business income coverage is on the policy and how long it pays.
• Look at sensors. Ask whether a leak sensor is worth it for your space, and whether your insurer gives a credit for one.

If you rent, read the lease too. It will say who is responsible for the plumbing and what you must insure yourself.

Who pays when it is not your pipe

If you rent, a burst pipe can start in a wall you do not own or in a unit upstairs. Your lease decides who repairs the building, and your policy decides what happens to your inventory, equipment and income. Read both together, and ask your broker to show you where one stops and the other starts.

Document what you have before a loss. A phone video walking through the shop, with the shelves and equipment visible, takes ten minutes and gives you a record to work from if you ever need to prove what was there. Store it somewhere other than the shop.